Notes & Quotes: Unshakeable by Tony Robbins

If you overpay by 1% a year, it will cost you 10 years’ worth of retirement income.

Is it really money you’re chasing, or is it the feelings that you think money can create?

We’re not rewarded when we do the right thing at the wrong time. If you plant in winter, you’ll get nothing but pain, no matter how hard you work. To survive and thrive, you and I have to do the right thing at the right time.

Freedom Facts:

On average, corrections have occurred about once a year since 1900.

Less than 20% of all corrections turn into a bear market.

Nobody can predict consistently whether the market will rise or fall.

The stock market rises over time despite many short-term setbacks.

Historically, bear markets have happened every three to five years.

Bear markets become bull markets, and pessimism becomes optimism.

The greatest danger is being out of the market.

Market turmoil isn’t something to fear. It’s the greatest opportunity for you to leapfrog to financial freedom. You can’t win by sitting on the bench. You have to be in the game. To put it another way, fear isn’t rewarded. Courage is.

What most people really want, regardless of how much money they have today, is freedom. Freedom to do more of what they want, whenever they want, with whomever they want.

Jack Bogle spelled it out to me quite simply: “Let’s assume the stock market gives a 7% return over 50 years,” he began. At that rate, because of the power of compounding, “each dollar goes up to 30 dollars.” But the average fund charges you about 2% per year in costs, which drops your average annual return to 5%. At that rate, “you get 10 dollars. So 10 dollars versus 30 dollars. You put up 100% of the capital, you took 100% of the risk, and you got 33% of the return!”

Wall Street has evolved into an ecosystem that exists first and foremost to make money for itself. It’s not an evil industry made up of evil individuals. It’s made up of corporations whose purpose is to maximize profits for their shareholders. That’s their job.

The professionals aren’t really any better at predicting the future than the rest of us.

The largest expense in your life is taxes, and paying more than you need to pay is insane—especially when it’s absolutely avoidable!

An actively managed fund that charges you 3% a year is 60 times more expensive than an index fund that charges you 0.05%!

One provider—a leading insurance company—was so brazen as to add a line item called “required revenue.” Required by who? What for? To pay for the CEO to buy a yacht?

10 of the world’s largest financial firms have had to fork out $179.5 billion in legal settlements just in the seven years from 2009 through 2015. Between them, America’s four largest banks—Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo—made 88 settlements amounting to a total of $145.84 billion.

Do you or your firm receive any third-party compensation for recommending particular investments?

What's your philosophy when it comes to investing?

What financial planning services do you offer beyond investment strategy and portfolio management?

Where will my money be held?

The Core Four should be at the very heart of your investment playbook.

Don't lose.

Asymmetric risk/reward.

Paul Tudor Jones uses a “five-to-one rule” to guide his investment decisions. “I’m risking one dollar in the expectation that I’ll make five. What five-to-one does is allow you to have a hit rate of 20%. I can actually be a complete imbecile. I can be wrong 80% of the time, and I’m still not going to lose.”

Tax efficiency.

Diversification.

Your needs determine your asset allocation, not your age.

The Rule of Seven. Ideally, we like our clients to have seven years of income set aside in income-producing investments such as bonds and MLPs.

Neuroscientists have found that the parts of the brain that process financial losses are the same parts that respond to mortal threats.

What counts is not reality, but rather our beliefs about it.

Psychology either makes you or breaks you, so it’s imperative to have a robust system that enables you to stay on target.

80% of success is psychology and 20% is mechanics.

The “endowment effect” -- investors place greater value on something they already own, regardless of its objective value!

It’s never wise to fall in love with an investment.

“The biggest mistake that the small investor makes is to buy when the market is going up on the assumption that the market will go up further—and sell when the market is going down on the assumption that it’s going to go down further.” Harry Markowitz

One study looked at 248 stock funds that received Morningstar’s five-star rating. Ten years later, only four of them kept that rank!

Start making a list of your own—an investment success checklist for the flight deck—that spells out where you’re trying to go as an investor, what you have to watch out for, and how you plan to navigate the journey securely. Share your flight plan with someone you trust—ideally, a sophisticated financial advisor.

Regularly rebalance your portfolio once a year.

Men are especially prone to overconfidence when it comes to investing! In fact, men traded 45% more than women, reducing their net returns by 2.65% a year!

We all have a tendency to want the biggest and best results as fast as possible, rather than focusing on small, incremental changes that compound over time.

When you lose 50% on an investment, you need a 100% return just to get back to where you started—and that could easily take you a decade.

Guy [Spier] suggests checking your portfolio only once a year. He recommends avoiding financial TV entirely. And he suggests that you disregard all research produced by Wall Street firms, recognizing that their motive is to push products, not to share wisdom!

A report by Morningstar showed that the average American investor in mutual funds had almost three-quarters (73%) of his or her total equity allocation invested in the US stock market at the end of 2013. Yet US stocks accounted for only half (49%) of the global equity market.

If you harness the power of compounding, stay in the market for the long term, diversify intelligently, and keep your expenses and taxes as low as possible, your odds of attaining financial freedom are extremely high.

The path to achievement is followed by a fundamental three-step process.

As Winston Churchill said, “You make a living by what you get. You make a life by what you give.”

Money doesn’t change people. It just magnifies who they already are.

The human brain isn’t designed to make us happy and fulfilled. It’s designed to make us survive. This two-million-year-old organ is always looking for what’s wrong, for whatever can hurt us, so that we can either fight it or take flight from it.

What’s your favorite flavor of suffering? Which energy-sapping emotion do you indulge in most? Is it sadness? Frustration? Anger? Despair? Self-pity? Jealousy? Worry? The specific details don’t really matter because they’re all states of suffering. And all this suffering is really just the result of an undirected mind that’s hell-bent on looking for problems!

Consciously or unconsciously, you’re focused on at least one of three triggers for suffering:

Loss.

Less.

Never.

Either you master your mind or it masters you. The secret of living an extraordinary life is to take control of the mind, since this alone will determine whether you live in a suffering state or a beautiful state.

The single most important decision in life is this: Are you committed to being happy, no matter what happens to you?

You can’t be grateful and angry at the same time. You can’t be grateful and fearful at the same time. If you want a miserable life, there’s no better way to achieve it than to focus your mind on anger and fear! But if you want a happy life, if you want to live in a beautiful state, nothing works better than to focus on gratitude!

Find something to serve, a cause you can be passionate about that’s greater than yourself, and this will make you wealthy. Nothing enriches us as much as helping others.

Whether we realize it or not, if we fail to plan, we are planning to fail.